Eduardo González
The Dominican Republic has inaugurated its Pro Tempore Secretariat of the Ibero-American Conference with a virtual meeting in which the Ministers of Economy and Finance of the 22 Ibero-American countries have reiterated the need to address the “unequal access” to “sufficient and cheap” financing to overcome the crisis and to COVID-19 vaccines.
“Never before have we faced such complex challenges that required coordinated action and acting as one voice”, said Dominican Republic President Luis Abinader in his opening speech at the VII Ibero-American Meeting of Finance and Economy Ministers, held this past Wednesday. “Ibero-America has the strength of its people and the determination of its governments not to be just another player on the global chessboard, but to be an actor of change with its own voice and enough strength to transform the world”, added the president, who was accompanied by the Dominican Minister of Finance, José Manuel Vicente.
“The costs of the pandemic are equitably distributed, but the resources to fight it are profoundly unequally distributed”, said Ibero-American Secretary General Rebeca Grynspan at the same event, via videoconference. “If we can find a solution, we will be able to take advantage of this situation to multiply the resources available to our countries and we will be able to close the gaps in this unequal recovery and lay the foundations for a normality that is not only new, but also better”, she added.
During the meeting, the Ministers and Vice Ministers of Economy and Finance of the 22 Ibero-American countries signed a Declaration in which they warn that “the return to the path of global economic growth” will be threatened “if middle-income countries are left aside”, which are facing “serious adversities that point to dangerous economic crises”.
According to the Ibero-American ministers, “there is a gap between advanced and emerging economies” when it comes to accessing “sufficient and cheap financing” to face the extraordinary spending needs created by the pandemic. As a consequence, “most of the Ibero-American countries have had access to international credit markets at higher interest rates than those paid by developed countries, and in many cases have presented larger structural deficits than the latter, with less fiscal space with which to face the crisis”.
“Financing needs in the short term will remain high, given that tax revenues may take some time to return to their pre-pandemic trajectory, and it is necessary to continue mitigating the health and economic effects of COVID-19”, the text continues. In addition, “unequal access to financing, coupled with unequal access to vaccines, has also affected the ability of countries to ensure sufficient and affordable vaccines, which implies different rates of immunization and consequently uneven recovery that could further increase inequity”.
The Declaration expresses its support for the initiative of the International Monetary Fund (IMF) to approve a general allocation of Special Drawing Rights (SDRs) in an amount equivalent to 650 billion dollars to contribute to the provision of liquidity and benefit all member countries in their economic recovery from this crisis” and recalls that, additionally, the IMF is working to contemplate “initiatives and vehicles that promote the voluntary channeling of SDRs from countries with more favorable external positions to those countries with greater external vulnerabilities”.
For all these reasons, the Declaration -which follows up on what was agreed at the XXVII Ibero-American Summit of Heads of State and Government, which took place in Andorra last April- calls for promoting, within the IMF, a debate on the development of alternatives to “voluntarily channel Special Drawing Rights from countries that do not consider they need them to countries that do require them, including middle-income countries”.
It also called for the consideration of additional soft financing for sustainable development projects, such as health and potable water, for the most vulnerable countries in the region, and supported the initiative launched by the Paris Club and the G-20 to establish a common framework for the coordinated negotiation of debt relief treatments, in order to provide an adequate response to the over-indebtedness derived from the COVID-19 pandemic.
The meeting was also attended by representatives of multilateral organizations: IMF Western Hemisphere Director Alejandro Werner, Inter-American Development Bank (IDB) Vice President for Countries Richard Martinez, and World Bank Vice President for Latin America and the Caribbean Carlos Felipe Jaramillo. Today’s meeting was the first meeting promoted by the Dominican Republic, which will host the next Ibero-American Summit in 2022, under the slogan Together for a fair and sustainable Ibero-America.
